Yale economist Robert Shiller, of the S&P/Case-Shiller Home Price Indices report told CNBC that Fed Chairman Ben Bernanke doesn’t have the power to fix the housing market. Another round of quantitative easing might keep interest rates at record lows, he said,but record low rates alone can’t predict were home values are heading.
“How do we expect [Bernake] to fix the market with just one button to push? He’s got more than one, maybe, but he doesn’t have a way of changing our animal spirits,” Shiller said.
Shiller has argued that governments should use eminent domain law to purchase underwater mortgages at fair market value, in order to minimize the incentive for homeowners to cut and run from devalued homes. [CNBC] – Christopher Cameron